NYCB - Earnings call transcript Q4 2019 | Flagstar Financial, Inc.

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Sal DiMartino

Good morning. This is Sal DiMartino, Director of Investor Relations. Thank you all for joining the management team of New York Community Bancorp for today's conference call.

Today's discussion on the company's fourth quarter and full year 2019 performance will be led by President and Chief Executive Officer, Joseph Ficalora and Chief Financial Officer, Thomas Cangemi, together with Chief Operating Officer, Robert Wann and Chief Accounting Officer, John Pinto.

Today's release includes a reconciliation of certain GAAP and non-GAAP financial measures that may be discussed during this conference call. should substitute in in for, GAAP. measures not to accordance financial a as our non-GAAP be addition viewed, and with These results prepared

addition, Reform by the call to Harbor uncertainties provisions statements today's results We that today's to In risks, Private intended XXXX. Safe looking made Securities Such and the forward-looking would looking Litigation obligation are to covered undertake materially subject contain could forward of statements conference actual be to assumptions of comments certain to Act will are on cause call. expect expectations. differ from no such update and not that forward any after statements

financial more risk Form release about the earnings the find filings, impact and XX, factors in will ended its the Form its and information quarterly on in statements Report performance period XXXX Annual September SEC today's may You for and XX-Q including XX-K that company's forward-looking XXXX.

I the the call overview Mr.Ficalora, start performance up of opening will brief To go ahead. before please now the a to discussion, call Mr. for who provide turn today's company's will Ficalora, over Q&A.

Joseph Ficalora

and that discuss reported full for ago performance. and Good diluted and year fourth consensus. you, XXXX compared months up is webcast earnings ahead the previous the XX, as per morning, slightly common December we joining this our X% quarter Earlier share both of three $X.XX year for and quarter we ended the of morning, us phone on to quarter and the XXXX thank operating today and to on everyone the results

was for inflection improved in and quarter. of the year marks a In the of with pleased the company's us are We during performance terms the fourth many quarter it strongest fundamentals. significant point ways, extremely

net the well interest and quarter, We in by the growth improvement quarter net strong rebound as income margin. as in interest linked the during loan are encouraged

expected second those both With year, half net interest income the the as net during interest margin the and improved during the X rates the quarter. of of benefit term federal metrics to short last interest times started current reserve our has lowering

now Turning financial to our performance.

nicely basis. Multifamily on the and the I our growth a basis drove total to increased on $XXX quarter. of As earlier, and were loans the the third compared loans growth finance fourth $X.X as billion quarter a $X a or increased specialty and basis. X% on lending during billion the year-over-year during or billion loan Multifamily year, loan year quarter and rose linked million the quarter $X.X year-over-year X% mentioned rebounded

year also We XXXX. the XX% total quarter up business up Our another strong strongly on the $XXX originations year-over-year basis. of originated as And were a that's during specialty a year-over-year billion $X.X finance an the rebounded increased Origination quarter and loans million fourth to quarter previous had during activity XX% outstanding quarter. the compared or portfolio on of basis, X%.

fourth quarter quarter, highest This Multifamily CRE originations XX% of since $XXX combined of billion while $X quarter, XXXX. X%. level multifamily the the prior to million increased originations totaled of was compared this origination the CRE up

that's almost this originated also up loans We of $XXX to finance specialty quarter. compared previous quarter, the million XX%

billion, XXXX loan order us, addition new originally sold we of is the growth we $XXX few threshold. the by in were loans us SIFI loans strongest XX% In growth quarters to at of as to the potential to quarter, started which Overall, And in continued repurchased it one million origination the These year was stands below pipeline strongly. fourth money. the and be loan activity institutions. off of originated encouraged over opportunistically Currently, for years. $X.X the this stay financial strong also previously to multifamily other by by during in sold

originate more is typically is pipeline the was in case reminder, quarter. pipeline as our a As than a the time what we at in this point

were $XXX X% modestly deposits and which On previous the total was increased in quarter, compared but the or were or side, to by large XX% XXXX unchanged quarter. $X year-over-year. million relatively billion compared led the The declined CDs, in to previous up part funding year-over-year growth

Our fund wholesale more was during borrowings loan rose as primarily on linked during growth $XXX the quarter funding basis was the wholesale and million alternative quarter. funding used quarter a past to a our fourth attractive

quarter. very Net to the million front, XX% pleased line increased as expense On $X.X declined. return growth quarter revenue to we see previous or were annualized interest the top compared revenue income this interest

fourth quarter. during X it improvement to an points the We in interest witnessed rose compared net basis as also quarter third margin the

increased. from and of in impact time up overall of points decline the was This quarter would basis and margin in the prepayment X.XX%, line marks quarter XXXX fourth our X cost fees, the first by been fourth and margin since Excluding expectations. interest funds both driven income the net the with have that

sensitive of throughout embedded portfolio sheet, wholesale the current liability given and opportunities CD improving XXXX policies, borrowings. repricing balance rate significant both these expect our these measures our We and interest within fed's

non-interest and compared quarter Moving in and in year ago the million quarter compared The the were expenses. the ratio $XXX in ago during efficiency year Total million quarter was XX.XX% to prior on expenses $XXX.X the previous the to operating XX.XX% fourth quarter. XX.XX% quarter. million to during $XXX.X

$XXX we on years, our two expenses and have going million operating to containment half cost by approximately Over continue and the we'll forward. past focus reduced

and quarter. year basis year. XX asset quality offs strong during X the or $XX measures average the nonperforming X points On basis or total average loans. loans million loans million $XX basis of our totaling fourth the of remain front, and of at total assets, while XX assets remained quality point totaled during Nonperforming were loans basis the for of asset only points low levels, charge Net quarter points

at portfolio charge our in been now this million. runoff that of year over two loans, $XX taxi to related last medallion and Majority the offs years mode were has stands

not asset quality rent under new the the months to-date in operating rent been seeing regulation we six negative now for regulated multifamily segment have we portfolio. loan any laws trends of our Importantly, are and

X presentation, portfolio Page than on XXX of noticed multifamily of The of points basis average portion total the about weighted is laws. multifamily less entire average on portfolio As State billion our $XX. this York subject XX today's XX%, multifamily is New or portfolio. on the rent-regulation the weighted LTV to XX% LTV investor

X.XX%. Lastly, we this closing quarter. represents XXth of on morning, February common of this declared record payable $X.XX an Board Directors the to share be of for annualized dividend of dividend that per dividend February shareholders price, on also announced common will the yesterday's as cash The Based XXth. a yield

ask operator the open your for the to On questions. line that now note, I would

today best But We this you. of our if get all don't, free call the to please within will to you us Thank do later time to we week. or remaining. feel

Operator

your Thank America. we with time, with Please Punawala At proceed Ebrahim Bank a you. conduct question-and-answer. will [Operator this from of comes Our Instruction] question question. first

Ebrahim Punawala

I loan the So just seemed purchased million question organic loan guess growth, One, I first a in it growth the I call two take guess I, if out soft. around it. part $XXX if to little basis,

where about you So been overall that to had multifamily And outlook of think loan last XXXX. participated. XXXX updated growth would time participations on book the loan $X in your just to had billion love $X billion you I was in for and in for the the terms hear loans

there of loans how if us could much is opportunity back? you to repurchase more those additional So remind

Joseph Ficalora

$X only can period market that have the We But is ability well we for about have thing strong the appetite we'll billion to ahead. is that. more our originate do and the the within

Thomas Cangemi

volatile We're Joe's was very to market. that take retention which that analyze, would add importantly, commentary quarter, is slightly, strong improve here we previous spread I more you Ebrahim, see compared in one it's to some rent But effective to good the Tom. have versus anticipated the the to is the the away focus a the -- transactions quarter in in We we when since saw our is market. very signal. obviously, year which QX, economic the of rate be a changed. go fourth off very

be is compare historically, XXXX for half XXXX. much goal to go retention rate second past, we when the predictable higher of that Our to the which back will to

when appetite reasonable loan is it, So and that growth modeling a think our market. very model the you you about for in mid-single digit

Ebrahim Punawala

fourth single about CD the think the quarter? core And in margins, growth. went guess forward? points I should on going cost X book How the loan the up Tom, in just it, relative we basis where guidance. margin repricing it in the digit line the of Got to And X.XX with your terms is

Thomas Cangemi

have on Ebrahim, say margin with would I a in clearly, the see as throughout of quarter expansion as XXXX, go well than point very as environment. the But the market, visibility know full quarter, the expected months interesting three very strong NII. I and inflection a limb don't you to because it's we year XXXX we fourth continue every in as we more

XXXX up expected So X QX the points NII as in basis quarter. fourth inflection in

I quarter, we basis sensitive continuation would interest 'XX. in so the expansion billion rate and was another that at quarter margin, any as a of repricing in say for prepayment expansion amount, margin higher and penalty will was X NII no actually is liability have points the at and rate. changes year. we'll that's second quarter lowest probably lowest income, about about entire -- and rate it's have indicated, and assuming first $XX.X quarter throughout We're X.XX% substantial and first the throughout excludes CDs $X.X reprice the you a QX to billion of billion The X.XX% the the $X.X

at are really just coming rates where of have X%. So a going south look forward repricing on, you interest current CDs expectations lot of where it's given are. if slightly And you

I number the think quarter. like in X.XX was the fourth

Ebrahim Punawala

X months. else points Is then X see give want three X assume, X Tom, we point, you it basis -- see that said to the that X XXXX progresses, we But accelerate so just to clear, that's are? where beyond basis to I points. expect don't as become points, know equal, and street basis guidance margin you that because expectations basis expansion guess I basis you accelerated should of should kind what points, safe be all given So

Thomas Cangemi

expansion us. really have growth more the dated Again, that importantly give I'm see the but for long to year, I NII margin I But inflection not guidance. we the throughout significant point. very feel that good is was I clear going

first We XXXX. the of half haven't that seen since

we a repricing. sensitive, liability the here, have is point lot inflection liabilities of the So

liability the on good benefit. get side, So we

In and borrowings, rates and coming in off XXXX for we addition which is CDs, attractive us to the significantly borrowing what's to is the have the 'XX. us material borrowings compared to and

Operator

next with question. to comes from the question UBS. listen Please Brock Our Vandervliet

Brock Vandervliet

we the covered So CD.

of some the hybrid bit borrowing a down terms in FHLB look this On you quarter. creative using know of the should wholesale last costs for refund structures. were pretty ticked near year What borrowing I we the borrowings, these on term in the costs? The in

Thomas Cangemi

I'll just specific with actual the numbers. be

Loan on billion $X.X that We have Bank now due three for yesterday trade that after X.XX years at on was we very Home it a XXXX floating LIBOR, X.XX to locked we're within a billion, and years three swap, there come it's with about risk. X.XX, based $X.X LIBOR, which put basis so at of rate. and in course We with about little out swapped

So that's of kind what we've doing recently. been

that to it three depending doing point and We're lock XX not continue is. half market and swap benefit It's short term our as we'll years. where -- going after look opportunities. up probably to we on to a two funding it at out So basis

you when that you given of take a And another curve. advantage $XXX have we'll million rate. of So XXXX, the opportunity go at into shape X.XX the

for some cost could high next market be money lower. we compared to that years, So the two have the repriced

Brock Vandervliet

for on term, of aware anything And in front? should we is that QX be near there

Thomas Cangemi

I think it's continuing.

to ongoing month. going each an be it's think benefit I

staggered it's -- throughout have We quarter. the

like Just CDs. the

the almost I QX think have in the the benefit CDs, that's it's amount year. given at we'll cost for highest of and double QX the in substantial a

that we at offering X.XX CDs, at that and on have CDs is QX three for XX coming month So off now cost money nine -- month at right already X.XX X.XX X.XX. rolling month the is highest and and

below well few you tag your on X%. customers, it's early if points a to So still basis

benefit next on for the year. we get a may CD So rate the run nice front

Operator

from question comes next with proceed Please Morgan question. Our with Ken Zerbe Stanley. our

Ken Zerbe

now the, I this your I going sort Tom, on certainly up a few to opportunity quarters out liabilities the about NIM But you laid case X this only reprice basis lower. for points a is guess for we've per of heard guess and of liability core just that quarter. side lot of lot the walk obviously just I of repricing lower lot the you treasury, sheet? five Can us a other year mean, benefit? through that offsets that like simply I matter the the X.XX. mean balance a are loans with it

Thomas Cangemi

me on the guidance I the Ken, any QX past margin. clear. let didn't give within

costs But where that where be for no, your don't position the well going in interest that's most billion fact a rates rates at are in are our coming the is about to bullish really good We the due go. expectation. 'XX to and should have be fund yields going very our out we're we of sizeable part book the So and and due multifamily in at the XXXX $X.X that's year, end about $X.X but of XXXX, the portfolio billion business 'XX, coming X.XX X.XX. of know

to to When a business effectively you a lot that multifamily in was rates look spread pricing a seen market rates, rates. CRE it of compared We've ago. we've at those year healthy at compared volatility been

we're a the offering and to be come very have Yes, rates basis very but that still competitive. So real. is XXX we there have good down going out point spread

is I going historical our rate be retention on norms. on to for We're focus retention. think very that pumping the up XXXX focused to that plan to

had take some call because QX from when You QX a away, improvement lot in underwriting But deals and nice was of go and we XXXX that aggressive of a we aggressive one what lots retention QX. of had you of agencies. the versus off

of for that's be to loan you razor to our a more higher small benefit have see put retention. At the really to 'XX. with move securities the levels. on to We're work move NYCB, same goal going lot and a capital is a not retention growth focused normality liquidity that now to in, time, percentage kick the whole where security, you see for right at these There's you'll portfolio. When to market very you'll

see relatively flat So it we're so opportunities. and keeping we being mindful of

Ken Zerbe

to So it NIM I of if sheet the most sounds the going going the balance that, growth come than growth I like side, is NII from extension, to you're NIM understand but that… rather paraphrase if get

Thomas Cangemi

of Obviously, you went and get post spread a a where quite that bit the seen, categorize probably look That's healthier rates would again if was crisis, dramatically middle that Yes, will quarter they XXX because but crisis depending where and higher, around today a back are rates interest point were a are. very effectively much fourth rates good spread to it spread. we've XXX basis XXX. move

there. more some seeing believe a that And change, fair XXX the ultimately and when rent basis at points is spread, control was we we're of good activity

lending very Our busy. people are

the focus on strong retention. making is Our have we sure

the our going We same coming know the we divesting our position previous that very have work have all people very participation multifamily, of some all active including loan of on as be were the and to time, looking some to we'll take data, are other a files, we what's At the quarter due there maintain to in in at we well. advantage partners and hard share. opportunistic we're

Ken Zerbe

you of going last do And reason gave about that this what -- your gears quarter? think above looks for into from and quarter little little you in a terms the bit they then increase switching just bit expenses were first a guidance like Any expenses, quarter.

Thomas Cangemi

I number we've on for team one, So years. commend would I the to control two had the been you to those It's years two say, expense keep difficult expenses very down significantly. entire containment

the for had year, part see obviously we number for what our the most guidance. than I would side throughout the XXXX. clearly one better came expected the most but very expense probably slightly So for expense say strong We in within management a probably

cost on want in the XXXX yet, containment. but be think I that say to I is going our don't it's to relatively fair to limb across And going to be key go expense stabilization believe that a it's we stable.

that We've items expenses the few increase slightly. to a employees instituted hour. XXXk going public have time first our a are wage as a to $XX for minimum for our our company. an match increased metro We We've

released And So the a we've in we're costs. New universe being but also as offices. as it area changing compensation is far for competitive, salary metro the York

So the XXXX. spending looking year-over-year, look for million maybe when of $XX expense normalize my when guess at you another base probably is you at

to you're you next for for now potential for that So higher the far although as run XXX -- looking normalize printed million $XX rate as and a number we XXX XXXX.

Ken Zerbe

But sure right. got we XXX it includes to Just million that increase? the make $XX

Thomas Cangemi

that's still Yes, a we're be fair. issues doing lot we're this years, on And past again, grow going going again, year think that's we've -- containment anticipation. I had to we're a lot cost to over the But and efficient. of few

have there not QX, and dragging aggressive I guide. anticipate the be too some has we that's get don't probably that completed to a by XXXX on benefit bit. want yet little in conversion We'll to Our

Operator

B. Next question. with question with Riley. Moss comes your from Please proceed Steve

Steve Moss

I year? prepayments, year. what was the you I missed this that are terms loan due expectations of wondering said, maturities just for in much Tom full On coming how

Thomas Cangemi

loans, come contractually We come they $X.X books the to table two year, at next X.XX% another have to time, X.XX the billion to has approximately the that be $X.X of XXXX that next would multifamily maturing same the in this billion table. years. the the about have At or to

very us. elevated feel prepayment we decide with us that to away there'll on we when or refinance they depending be depends the activity economic prepay opportunistic on So from dollars, and

but marketplace, what market. deal given at you getting they're looking was go through stream quarter. return transaction, hurdle of But at you a when very relatively Activity on the interesting was that strong very strong, higher being was XXXX, a QX, said, the QX Mr. QX say have look very rate as strong. the are there we versus through to anticipate I'd that is as the healthy strong strong buyers And was Ficalora prepay. some We follow a dynamics a a quarter. had origination Origination hit done. indicated, of very

towards Yes, activity, done, are return rate sellers. of deal and we hurdle that move to which deals reasonable. a is interesting slowly being because has there happens on it's starting been QX. But buyers it always So activity see QX the is

These are not XXX% at levels They're being that rates very transacted type elevated. multifamily are reasonable. rent are regulated reasonable. Cap buildings

reaction say to and as hurdle will change higher, property away I'd the of So in returns enactment done from further continue are rent rate of getting believe that move that we transactions the they're new the long changes control some the term we for the law. owners

Steve Moss

largest. And then said C-bucket's the the I think that Tom, you quarter also second

re-pricing. how wondering in that Just is bucket large

Thomas Cangemi

QX is about $X.X billion that's X.XX due. to coming [indiscernible]

Steve Moss

in seeing spreads just yields then and multifamily of you're for here, these wondering And terms new where money just CRE days?

Thomas Cangemi

solid on to probably eight to known a to been that holding adjust to get premiums premium We've to fine higher historical But job trading. we've another June at paid XXX making our presence on the XXX, spread need We're of that a since CRE. quarter we a done above be that going competitive. to compared

very So healthy. it's and it's but XXX give still hopping take here been or rates around there

Operator

Our Alexopoulos comes Morgan. question. question from your JP next proceed Steven with Please with

Steven Alexopoulos

repurchases of XXX was the done First I on the million loan quarter, at that par. in Correct? assume

Thomas Cangemi

specific I'm two the years this obviously is price. tape left. not to be But on going probably

it's So loan. all

control So we transaction, it's proactive. very going to be the as we're -- under

more we're I but actual So and dollar. specific few on opportunistic. are We that would originated. These we're say be there's approximately accommodate. not a that to we've the out the I'm there level, think loans that and to here take give But going

looking more be move the of the this event on away other will line decide We are and focused to have we partners out C&I. the and/or of to in all data business of files

the So mind, not place, shifting grow criteria in a could we when in we Steven, in put threshold we were bank. bear this

to our our had out the of accomodative our very to of partners, So quality we that asset billions metrics. the in are had and friends marketplace marketplace go dollars

sheet pleased that balance give very with offer able to are it to in back. our we be So

Joseph Ficalora

of refinance will these loans. we probability, And most

Thomas Cangemi

the done lot And keep what's transaction way XX/XX, only a if has the I we've is this at originated, the have we've important, XX. someone retention take of XX, [indiscernible] originally think structured, we we that to

less these potential the that over struck get and out, the growth thing We've refilled of are the take have we financing we that we getting transaction actually two the of that this that as had many the deal ongoing we with on years. for more on was of because past them original players sale. part So

Steven Alexopoulos

What of would $XXX yield million? the the be

Thomas Cangemi

XXX… XXX, under just Probably

Steven Alexopoulos

XXX, okay…

Thomas Cangemi

don't most we And go it's so And going origination so and got year left way, bucket. to to said to to years life, years life with terms replace average as to suit half. that two that years and They not start I refinance. left, XXXX two with do XXXX the they're it's by tied on life grow need and two have the and

Steven Alexopoulos

that on that's or which could all Could if repurchase And wanted there that? you repurchase. to, then restrictions tomorrow or you are remaining $X time the restrictions billion other you

Thomas Cangemi

the a to optimistic restrictions. There loans I If is underwritten would in it look, opportunity our willing mean, as we are our loans is. is it to believe what very If metrics. to, is done time back no time credit well well take we someone those at that's as LTV. love have and

market. not far to there I you give to the false go I'm to will leading want expectations. clearly, as we time-to-time as don't but So for numbers, be from

the the know, think we are loans. market in our loans You best

more than accommodate. to we're willing So

Steven Alexopoulos

But are looking not partners and quality is to if good, the are the your these? why credit divest bad yields

Thomas Cangemi

are and number their by C&I, diversifying and There's public with mean, they're many I their They you lot obviously, other of things statements sheet competitors. reasons. business a made balance model. see of doing

lender. do -- our bank doing controlled business a regulated our we're lending. multi-family This do. say the are we're what try we're model. not going rent a is We not marketplace, focus model. This CRE commercial -- is that's core rent We to to in We business C&I we

like be was will our spread. said I when customers, So the at there for initially from changed highest rent we

Joseph Ficalora

asset assets. these that and with have far never people these originated are We more comfortable

not well for the very This work unusual is is concern. So period us, to future us. going an for out

Steven Alexopoulos

rent on are you as contracted post How guys have loans. now that of six much valuations then months? new seeing appraisals multi-family new And regulation, you

Thomas Cangemi

control that's publication of the a picture but correct, a well rules most But fear the that near you of total are full been rent of cap in to the was have when the as that the you've commercial because deals component hasn't the put of that a use have are in there coming read aspect. comment, been as what not rent we these don't same information have rates of take transaction, would were lot rule I probably the done, the as lot they So go, rent deals not place.

we market, mid versus low still the high to pockets markets. of pockets X said, in you each are diversity each Like Manhattan, certain of each area look to So X street, stream. other at seeing Xs versus have certain I differently, income versus France Manhattan Manhattan, each of the borrow,

have rate well. cap So held very in

which You not want movement XX statistical quarter, to the do some initially. fear basis to the rate, maybe a was what points in cap near analysis XX is

decline Some down these made been of because driven of add unreasonable literally on of When it's the commercial not use carved XX%. of sense, rate space that the the publications reality. no out not -- you value numbers the back, the return. adjustment, have the hurdle, of the put that income It's really They've of stream. hurdle

moving a constantly. units money high-single of its have at put you and some to return. is high-single either -- at a units you it's thousands the about if return, manage, of term digit, they was property capital when that them they'll up be model, willing and they their it think behind up not were your digit can peak, get long This That put business zero, when attractive was you financing it, owner because and you're

mid-teens. single When became zero put that, IO there a fact you the to it, that. digits, my market into out features is comes it So for

So looking on you're with its single amortization high probably at mid-teen. IO,

Joseph Ficalora

has to change values. has future that important really the recognize it's impacted But occurred

values. on lend on future values. We We existing never lend

any of be be, the when effect our and projecting fact tax going had the be in opportunity That practice. we're our change our the that to the is So is whatever consistent prospective has value with may to numbers portfolio upon asset. going of adverse not based

from particular lend XX months going are that our because and many, six actually existing have, in when on people lend in over because to this from we impact many, never months this. lend, used our the estate, We've doing is the the that are the concern in in I future now, the to start the going not portfolio many, therefore, knows no now, market order real is values we value ability that that that non-performing, and everybody we to building. It many trade assets

dollars than more than the lending cash cash lending flow. other flow. you're on we're We the on value lending, you're If the existing lend existing only

So has occurred less, and our this doesn't even though value will prospective repaid. be ability it be change threaten to the

Thomas Cangemi

additional Steven, business. that financing, the large to hit on would commentary it's of manage just going are them now looking and how to -- encouraging willing add to these and different. and others units are at of lot be there nuances And is are financed. one reality There's they but see the somewhat their return this of a I rate people very some stepping in transactions marketplace the being And long term financing getting the us the well are money, be reasonable between up

leave for vacant adjoining have wealthier players join units do so. capacity changes, they'll try to That's the of particular the network door. and looking based on loophole rent do, something next and unit some in can rate the but They're have they that to

will marketplace So players changes, that will to and the have transact. you hitting it's ever the But unfortunately be for continue probably than less you seen before know a lot these city. of negative because large I units which think of these

Steven Alexopoulos

just could one I actually question. change Joe, final if And direction,

MOE before before try and for announced the Do get now. presidential feel talked the to election? another a saw earlier we approved week in release something you any while the you've about sense So and a of deal announced wanting do to and urgency done

Joseph Ficalora

to the No, articulated. we I a goals actively people of discussions any have do urgency with in accomplish to marketplace the I would we that that. don't suggest But are feel that in variety

Over the by course have grow for acquisition desire we've made create we and of clear and our that ability value the the entire shareholders. have public to life, it very

horizon the will there going that past. So kinds in line is the of a on with in done we've that the transaction exactly to be things be

that suggest ultimately to you discussions are would I in because we that's we So active what do. transactions, to do

Operator

proceed Our Winter with Peter next Wedbush question from question. with Please your Securities. comes

Peter Winter

was I XXs. in just range. with you're I'm the comfortable for that you ratio XXXX wondering about curious. Last the still talked quarter, efficiency if just low

Thomas Cangemi

of but XXXX the you duration normalized a prepay, to the expense I on Obviously, every based guides I'm XX limb same a But go we going specifically. XX. I in kind the given I does -- we think go of to any on gave time, world not prepay the up have so that should on healthy I play giving factor guide NII hate up prepayment portfolio. a quarter. relatively have At the

should ratio. So the improvement efficiency see we overall from

moving have fact cost right and the be NII unreasonable take Our direction. XXs of is so containment many now our in a flow bring the low goal the to that we've happen. that that the low to sheet in XXs not target. marketplace the been NII to years years. compressed given in And hopefully, in in mid going make kind positive a to It's our will many, but an a would mode we and But it's many balance for few for changes

efficiency should bode the point inflection of of ratio. other for this the attribute calculation the well So

So this help the us improve should ratio.

Peter Winter

growing at at thinking think just from… wondering of in you're a securities just it get I the I range quarters consistent was pretty some the at at been you'd to that's assets last I'm looking about teens like point portfolio, if couple And because XX%. high securities to

Thomas Cangemi

right look into structured think that I as We've lot off are to Cash Yes, far end the months. at a day, the past six of fair over pay you flying bank XX the the piece, to paper. are where had of bank just the but it's now. mortgage spreads flows say as

So we very stuff end bank. have materially. large down as But were player very come and the Dutch the as has yield to far the overall yields the at been day, nice of

in healthier highest take loan market through going we given back So we our we'll the we're this and -- a market call and going proactive. to in the it's time be to it, allocate slope book, seeing to interest that a to changes curve, level, if where resources we'll start go slope get But we'll some more event rates. the

Peter Winter

can And of deposit growth in are And how just balance the about your you wholesale growth deposit what about last question, borrowings? and then the my talk expectations use XXXX? you between for think

Thomas Cangemi

is going mean, with in market be I goal growth. the to obviously deposits, asset with the we're to commensurate

almost If a the consistent you of look with the towards of of XXXX bank quarter quarter, grew out We in wholesales QX. a we year end shifted the for fact little as the deposits back cost the lot of had and asset because bit the full relationships more fourth that our higher growth. we

locked expenses low, for growth said in substantially I But commensurate XXX the when growth, a you look same at market compared is -- growth overall the with look there XXXX plan the you one. when previously, at it But cost short that's absolute XXX had we'll year XXX versus ultimate. high that on term depending deposit I'd money asset funding belly good conditions solid out at rates out we we and right XXXX like term the to, of few curve deposit are in years, and short say at a readjust they're if at and the pushing now

sensitive, So the aspect of given it's that are more sides attractive. current attractive liabilities. the but we're Both reliability refinancing is attractive our

Operator

with comes Partners. proceed with Please your question question. Christopher Marinac from next FIG Our

Christopher Marinac

yield portfolio, success then specialty in types Tom avoid that on looks and strong. you that and of you of remind in on the Joe, you've the really and you and also past things specialty things finance the do the us differences pipeline finance. that the types had Could year the

Thomas Cangemi

and we We they're As on has XXXX focusing job strong another pleased the believe that phenomenal going very to an of talked our introduction. quality. have have we're team you and job done support team asset about, a incredible the done have with members

amount equipment that No late $XXX $XXX with is total been at no defaults, could that's of asset-backed speak funding, The which attractive million, to XX% finance with Equipment XX%. flow credit very planning we book. this and delinquencies, no deals loans, million between $X.X total of real XX out environment about is the diverse outstandings broken in percentage total $X.X three of which no has deal outstanding is billion. of well pays, hiccups dollar categories, and around asset-backed book compared billion flow the

when into higher The about that be X.XX%. than take multi-family It's fees going the our the active. amortize yield you to paper account is yield yield. we on to slightly We're

most important think what's we turn see. down I is is that we what what see most of we

XX% see. doing of XXX% about what effectively So we rate on

various we've this the been not we board reasons counterparties. basis. we of on XX% CAGR XX% is could But the be with credit XX% book end have be be at around day, happy we down the that see, not various the to the what So growing typically our may of turning what at because yield been do, don't

said are conference there. doesn't with very relationships. deposit capital in pleased come previous we my So I it calls, Like allocate to

banks, are shop. we We the up but to buy not intrusive a lead credit are

deposit of be be for a not that's in largest And we're funding type to -- in business. aspects good negative down -- so we we one business. the partner the of relationship, are this going bringing the some players bookings very will of of We're but not that's a

Christopher Marinac

than really That's deposits had the and going I that year? quarter, still core that. deposit it's was great. the been this And challenging sort stronger know of But for speaking through do environment. helpful. a your it deposits, you Okay, total. solid CDs Thank seem a then, of What see pipeline? ex for what

Thomas Cangemi

that a in we than was a be Rates to saw in ago dramatically trend were the lower Fed the going quarter. to is similar year that continuing fourth think mode. tightened the We when

the curve. cost So month highest the short of will of into money offering be in rates highest end category the three

think CDs to viable and customers rates liquid at around one out year going as the three looking on and longer a a For XXX, are year at are, offering months alternative given where I a that X.X.

So go clearly we are into the duration. customer enticing to shorter

money at you are XXX Our that nine yet. is seeing month

past the fed should previous the meantime, advantage which the we'll keeping commentary. XXXX higher So this reduce stays rates happens been of year, decade. has the those think have CDs for flat cost to benefit well further. planned year year, be due mentioned we in very I In take coming customers throughout for inside for of the And the as to consistent one that are if fed the

Operator

Our your next with comes Please question Matthew Stephens. from with proceed Breese question.

Matthew Breese

CECL, was well you two like. the what Or of And I one of basis, talking trip on what hoping increase would could about to just any day a could look sort reserve commentary then as forward helpful. you you are should on if growth reserve or go that we would day talk expect help be about decrease? us understand types

Thomas Cangemi

Again, $XX and So the say, increase looking $XX I'd adjustment, to XX%. to we we to our one-time of very on respect short material that which very, our its duration XX% we XX% at a other lender of in compared are estate loans. impact real don't about given is are million having and envision reserve, million -- types XX% overall company to is to

from look But material. you our capital basis a short, relatively could years at between upfront short has we forward. very it's and predict hard duration to at X a multifamily not three macroeconomic book, impact X.X average a years are for to probably material should The If points is basis going changes X what points happen environment. not that have the now. life the It's albeit and to two, book,

Matthew Breese

question. then capital And with sticking the

lower. a is Over tangible seen and by last measured common equity we've year year, the capital half, grind slowly

are levels NIM outlook the road need dividend to talking lower? do with any And expansion. you potentially about Given you're growth the down comfortable potentially or the of see adjust the kind sort common you raise equity? taking of capital any How

Thomas Cangemi

EPS the I been doing, go doing because this NII question margin quite to for am growth. is time. growth, this with commensurate to dividend not we've stage the of going game at some Obviously, [indiscernible] expansion

quarters we reasonable and growth, in EPS have double the which I should think previous said I'd and is conservative. the I like So that's say

I a we're in in in time to that NII the improve So margin -- some dynamic this build respect with think earnings the capital spend. for as first and positive a of while

that. think we're I encouraged So by

capital very was I position. comfortable our with

no We have losses.

losses. have We history a of no

of the quality We the asset have a best country. in history having

lending. [indiscernible] allocation losses, high quality, have towards low So leverage zero as as we provisioning for has you far impact allocate capital the little when very of

position. very we're our comfortable So capital with

that's dividend is Our company. been the been standing of and we've our hallmark dividend the solid always by and

Matthew Breese

going digit back comment, quarter-over-quarter. then XX% is the pipeline growth And your down to loan mid-single

organic give want the being how to growth a breakdown. of repurchase from if much us get could versus for activity, the you Just anticipate sense you

Thomas Cangemi

I I wouldn't and budget organic. even repurchase activity know

is which XXXX quarter. rate, look seasonality more in billion the it's we in on are $X seasonality, do the fourth down if We at razor-focused the in a will to our importantly, QX and you business quarter, increase retention

of we're So about what's very us. excited ahead

are on loans announced much that pipeline, coming have we guys $X two we're the a we is years. the coming that billion Our committed billion, next are $X pipeline extremely rate, that in busy. higher business is pipeline of The retention the managing in managing razor-focused because that and due

We file. have the

data. the have We

at we customers. first make will sure that We our crack get

Matthew Breese

what's going last is releases. you on we me the just then see behind to see on the do the one reappraisals don't side. scenes multifamily And get with from We like press LTVs and

us over Are been tripped there was have you lower? and have Have there just borrow willing the If behavior? where Where been walk people any is come cash XX%? LTV? table LTVs through analyze could have seen what valuation? I that borrower actively Just to have valuations so maintain that behaviors lower And they sense hoping you to low bringing of around do, reappraisals? in some and comfort

Thomas Cangemi

and in control So that's heavily of environment. concerned By today's end you're at about leverage and impacts we're with, numbers buyer hurdle there I leverage the transactions. themselves been and of effect. to agree laws parts some to quarters then can if borrowers. that be the the putting going to what lender people a together you're of two low the am types stand see we of take are will in about But We're lender the don't not time past other day, that the coming going see low at the It's rent of this. the day, rate these are end return

play government, large we We'll play against are very very losing finance the are conservative lose conservative but and a because of we aggressive. a being underwriting. we're against lot targeted we We based banks on super it toward other loans, policy banks if

see lot done. about that you'll we're the what of a trade current now, So publications information seeing in right deals get

property competitive. XX for But in balance want this you those our with all make you we of you'll try some because not we're sheet. doing a IO they rate, it may of be do years not extend doesn't down to couple hallmark bit may may We're always that's you you to the to power. of seven, And company. been of IO, but you it to go because of from money, deals some to extra deals deals, the lose environment, little sense owners because maybe structure lose will year going comes QX longer But IO may know that, an tweak because five a have no all

when in So buy will come opportunity. Then times that and activity. Buyer we'll there'll finance difficult, be opportunity. are

they're the on the works in customers goes us, financiers So of because are put of working, special someone but you're or the to Fannie financiers their buy the losses right if seeing that And It's into the getting customers, are we're our not the hurdle for at yet. that that the bridge in -- good And that a them. Freddie we'll he's structure or out handful that customers is that our there some not yet. that so The are of difficulties. news dilutive because the that's structure handful return not equity sale, that's will players it. are the Mae non-traditional it finance Mac book, are of a rate not for coming some servicer deals, positive are numbers not when

Matthew Breese

Understood, okay.

Thomas Cangemi

last rate not interest are a are rates low very rates so holding I'll just nicely. still to relatively very compared year, Interest you moving rates say environment. Cap have aggressively. other and one are And you a point. rate low have Cap cap low

because relatively that. is strong of business So

Operator

comes Capital question with from with Please Duong next question. your Our proceed RBC Steven Markets.

Steven Duong

to back those today versus color the competitive factors the what driving non-banks? you're in terms some seeing getting other environment. you to quarter GSEs and differences? saw us what what give And just So last the Can of you are

Thomas Cangemi

Dutch we always welcome would and GSE and is IO lower potentially very very drive them IO. proactive to to we XX that, type IO, and type going attractive alternative I And and three bring real large say very will hybrid it's to some. to would is to be higher be for players try over a a active. player, who two, want their very We've trying be that year period. say I returns very the tend avoid that of customers IO maybe in year structure been to payments When model. play, one, it's

low that relevant. go you up But a us for landscape. may with play leverage to less are in the agencies in scenario have good solid a if transaction What you have customer, best very long the end, rates is term back the

same to And acts sure And at customers. the that the at in our biggest marketplace. relevant we the managing said, be due very going will say we're know the active So has government and on like all making get book coming you first but they're transactions the compete. that's now crack I right that time, for I'd

Steven Duong

color give question, last some a just just the then had in deposits that? noninterest uptick quarter. you on Can And nice your bearing

Thomas Cangemi

just of book escrow targeted any very wouldn't say, deposit seasonality seasonality, year just large it's we're do running It's there. plan. would because a think I again a but I we end, some this have not

Operator

your question. KBW. with Please Gilbert Our next question comes Collyn from proceed with

Collyn Gilbert

first funding side. Just the on

So, CD market that there at even the if you grow ability you in the or putting now. seems are out are below on sort some of your Tom still confidence some probably market CD to on I It you market. rates of I offering, have those the mean below are like are market CD? rate you book appreciate deposit rates of

Thomas A Cangemi -

said, points for a customers at the to end we a to who of markets. competitive points customer different basis a in have us the we hybrid do X there. X large But have basis elite we lot day, are We're branches retain penalize a very I been institution, it. of going maybe of or base, few Like offer

to change if and then loan the We will on growth overall of where to We're going market right XX% in are the X% where not like on you’re if growth we slightly said, side, middle into does you X% in growth a market But a massive now. becomes growth campaign campaign go average go in the mode. of market, and campaign is. south range I the think is the the

market by I still is the think way the high.

look at now. are trading you If where treasuries

we at of a on because money requirement, some as lot good the and But were requirement. a quite cuts changes, in a time, high place have a think hold in fed think and for larger too put down our sheet liability no months, in their mean balance from of now, where model balance nine of we’re the probably banks liquidity were bit, are year rates centered some spot rates sheet NII unique a rates I sensitive we benefit in X.XX fed’s lower. pushing quickly. But and from come reasonable growth the with right rate, see we’re was assume fed sheet balance has and very that, it’s

Collyn Gilbert

more deposit purchases? do Okay. growth That's see How indicated helpful. if do commensurate you about And then you intend to you so with those? loan opportunistic loan How Tom fund growth. just had

Thomas Cangemi

wholesale the four value with There at the curve the short of putting year the look doing if wholesale said you financing now. look properly before, swap -- is well both expensive the deposit right end of market a be somewhat attractive of on. Like will three very end we at will markets short uniqueness as or lockout structured as We compared markets. is a is when the I curve, and

been basis time-to-time. The have doing is that risk we So, from low.

proactive I and think time-to-time market a versus have been on the X.XX from money now depending definitely delta it’s the CDs but to move have reasonable wholesale. we on right place, a so very reasonable execution bullish putting X.XX we're on it’s there, towards

Collyn Gilbert

Okay.

And right. That's also to point, your Okay. just helpful.

to a retention of loan So, growth be key to sort going is outlook.

questions Just on that. a couple of

quarter. from I pipeline? that last this new is so you and was have Do indicated had think has you in release, quarter's you XX% percentage guys the press So, put pipeline what first time the money this the

Thomas Cangemi

remember say, maybe I back releases trying put we look would to it the tout think press have overall I various if we’re money I I So, always always new pipeline. in,

consistent. that’s money been been pretty around two-thirds New has and

for reason, customers think that, New that doing didn’t than with certain expense you York. I go had to transfer going deals to that interesting of because is the rather bank They when to know you in the we good have what's some of mortgage have tax. transaction deal financed a themselves going are

facility So from money which they cheaper credit used That their from was than getting the bank. time-to-time. happens

quarter, So, carve happened you those take think try in the I advantage has out improved and retention of slightly. to what the one-offs

have like that to six than to going was would normality retention which way I a towards We previous the higher were in rate go. months. have back we significantly long the

quarter wasn't the that a We in off QX, you place. So, control some of blockbuster as It we had lot things buying done. drop as put QX. transactions a rent selling. sort curve in very was are in good there the getting are QX, and when volatility far of laws attractive and had stabilization transaction yield helped but

realized I we’re more and next a dealt that to now years with have there’s I and So, to year that money lot a there, be of customers has the they in like finance we’re for fed the two open right fact predictable so think that less business. to have or the

Collyn Gilbert

the aside lines kind was putting billion of $XXX originations, of $X.X just net so growth, of along the then the And purchase million.

mean they this gap I'm if that for would the they're I think I you are that I prepay? just to if you've contractually bridging out obviously of, dynamic right. talk think about prepay, prepays better understand maturing, guess outlooks they and So sort -- laid you've trying when would -- wouldn't and I XXXX, maturing why year, the in numbers contractually

prepay income wouldn’t be So less? significantly

Thomas Cangemi

not what on they're know in if comes the XXXX, depending financing, X% said, they I pay They the due, Like on important. second, will We bucket going wait it’s pay very their to right. that last market.

is the X.X%. market say Let's

but they're going have that So no for don't but decide decisions, their is you portfolio a still choose in opportunity for loans. of their where prepayment, due. those the ones choice financing. do own the on X.X%. financing instead years they next to to arrive. Yes, next rolling will in the come loans into so lock to bank. They The XXXX, entire of on based to get good 'XX are the five But It’s the based and seven internal X.XX%

to We very the the active table in sooner. We're case, working on is to with particular customers all going retention. be our this maintain but goal that to our get do into time, higher

five a know could position So in going knows coming coming what's with be a because an portfolio. next to go lower we proactive the next and years to for the higher and opportunity base we They years. for two them much we are a know be to today, in to what's where may so opt the one those not to no year from now. yielding rates due -- with next put finance it’s But take loans, the due,

Collyn Gilbert

Okay.

Sorry, you've this what one that was is? me or what -- last where and you to -- that quarter your Did -- question, tell the been can how you compares what previously goal running us retention tell rate.

Thomas Cangemi

which that back above So well the is level, goal is get XX%. historical is to reality our to

Okay.

large are when probably seen. $XXX there we The by it by rate were the it We loans used was that out you willing a retention our those We've probably was we take I going were mentioned finance. over facility one-offs, and themselves. not yet. because carve we've loan a one QX particular that XX%, you credit not to knew to improved finance bumped And up XX%. million in the certain worst

in That's XX. towards XX We and be moving becomes XX XX need So XXXX. to the goal. well over

Operator

from Please a Vandervliet of your Brock have UBS. We proceed with follow-up question question.

Brock Vandervliet

kind of I guides of up as walking number, we a should variety of a net more still day have reasons. a about talked or should for basis be specialty is charge-offs, point what or heard think the know we one this into far something of impact. the charge-offs net lot XXXX shift given finance about How CECL a banks you We've as you? X thinking kind

Thomas Cangemi

The the those the No, we've at our It’s if I major the good has know number medallion, of for credit some history, really probably history What are would us. Brock. the carve there marketplace. few company, the you out most quality. the most say zero to you of Medallion assets news taken the years. in been players there, of circling charge the past acquiring over look is

there. like getting to close So we're it sounds bottom

they you have seen medallion When finance, -- it's out losses, don't losses, any day far as as haven't the bottom You never predict is. a been take where specialty XX a we ever.

work credit I losses. very lender wouldn't So think rent-regulated with in we're what understanding we odd good history I a no difference is -- spot. this a card multi-family of a we’re hard do. CRE too in a because between We're

CRE loss multi-family, the we've is de which is in had half our think book I minimis.

We're change from the I two is change. X changes that going to to a don't take and usual change real business we So a us. as points a and yes, that, they upfront after can between XX, But marketplace in have of points. goes to any basis of in for avoid because material impact the to the the duration provision to, the basis rightsize X one-time less adjustment, it’s years envision capital

Joseph Ficalora

part business. past. period we It's Medallions out not are that our getting of over down negotiated had sell. of dramatically. something That’s actually be the to We'll consistently

Operator

this Thank closing Mr. you. to turn over comments. back to Ficalora I time, At would call for like the

Joseph Ficalora

us April, will look the you. for with to ended of the forward the March this NYCB. discuss to you for three again our 'XX. performance Thank chatting morning Thank your end taking XXst join for in when you interest months at again time and We we

Operator

teleconference. This concludes today's

lines this great a disconnect at You And your time. day. have may

Flagstar Financial (FLG) 29 Jan 202019 Q4 Earnings call transcript